Archive: November 21, 2017

Long-term care (LTC) isn’t something anyone likes to think or talk about. After all, no one wants to be a burden to their family, or be forced to move into a nursing facility because of incapacitation. But at Silverhawk Private Wealth, we believe having a long-term care plan in place is crucial—even if you never need it.

Here are 5 things you should know:

70% of people turning 65 will need some type of long-term care in their lifetime.1

Even though 70% of retirees will need some sort of long-term care, not all of them will need to live in a nursing facility. In fact the data says that only 35% of people 65+ will need to be in a nursing care facility, and only for an average of one year.

Unpaid, in-home care (like from a family member) is needed 59% of the time.1

If you are worried about being a burden to your spouse or family someday, unfortunately, that is the most likely scenario, since unpaid, in-home care is utilized by 59% of people 65+. According to recent research by Lincoln Financial Group2— Emotional Aspects of Caregiving —caring for a loved one causes 44% of respondents to feel “overwhelmed.”

Medicare doesn’t cover long-term care.2, 8

Many people are under the mistaken belief that Medicare will cover them if they need long-term care like a nursing home. It doesn’t. And to qualify for Medicaid, which does usually cover approved long-term care facilities, a complete spend-down of assets is usually required—which could bankrupt your spouse.

“Medicare does not cover nursing home care except for limited stays after a hospital admission of three days or more. Nor does Medicare pay for in-home care if it’s not skilled nursing care.

“Medicaid rules are different for every state. But generally, an individual must have $2,000 or less in assets ($3,000 for a couple) before he or she can be eligible for Medicaid.8

Assisted living facilities are used by 13% of people 65 or older.1

There is no nationwide definition for assisted living, although it is regulated in all 50 states. The level of care differs. Here are some of the differences between assisted living facilities and nursing homes:5

“Assisted living residents are mainly independent but may need help with daily living personal care tasks such as bathing and dressing, while nursing home residents tend to need 24-hour assistance with every activity of daily living. Assisted living residents are mobile, while those who are bedridden require nursing homes.

“Nursing home residents generally have a single or semi-private room, while assisted living residents typically live in a studio or one-bedroom apartment. Nursing home residents require fully staffed, skilled nursing medical attention on a daily basis, while assisted living residents are more stable and do not need ongoing medical attention.”

While Medicaid usually does cover approved nursing homes, it does not cover assisted living facilities. Or at least officially Medicaid doesn’t cover them.

According to Eldercarelaw.com4, “Almost all state Medicaid programs will cover at least some assisted living costs for eligible residents.” Certain aspects of assisted living may be covered on a state-by-state basis, because Medicaid recognizes that it’s cheaper for them.

In 2017, 43 states and Washington DC offer some level of assistance for individuals in assisted living or other forms of non-nursing home, residential care through their Medicaid programs.9

The cost of long-term care is increasing.7

The median monthly cost for an assisted living community in the U.S. is $3,750 per month, an increase of 3.36% from 2016, according to Genworth’s annual Cost of Care study. The median annual cost is $45,000.

Compared with assisted living facilities, the cost of nursing home care is nearly double, and continues to increase. Genworth Financial’s 2017 study7 puts the average cost of a semi-private room in a nursing facility at over $85,000, or $7,148 per month, although costs vary by state.

Let’s get together and discuss long-term care strategies. Traditional long-term care policies are being replaced by hybrid policies designed for Baby Boomers, like insurance that pays a death benefit if you don’t end up needing long-term care.

One of the biggest expenses for retirees is healthcare–and it’s getting more expensive.

A recent analysis from Fidelity Investments shows that a healthy, 65-year-old couple retiring this year will need $275,000 to cover their healthcare costs during retirement. That’s up six percent from 2016. 1 Fidelity’s calculations include premiums and out-of-pocket costs associated with Medicare parts A, B and D. The numbers don’t, however, include over-the-counter medications, dental services or long-term care.

HSA

Even faced with these staggering amounts, pre-retirees do have choices to help reduce healthcare costs in retirement. One option, a health savings account (HSA), offers some attractive tax savings. Any worker who has a high-deductible healthcare plan can open an HSA. You’re currently allowed to save up to $3,400 annually, or $6,750 for family coverage in the account. 2 You don’t pay tax on your contributions, they’re allowed to grow tax-free, and as long as the funds are used to cover qualified healthcare expenses, you don’t pay any taxes when you withdraw the funds either. You can even use them to pay certain Medicare premiums.

Long-Term Care

It’s important to consider long-term care. Medicare does not cover it, and in order to be covered by Medicaid, a family needs to completely and drastically spend down all assets. A private room in a nursing home now costs consumers more than $8,000 per month, or $97,455 per year, according to the “Genworth 2017 Cost of Care Survey,” released September 26, 2017 by Genworth Financial, which provides national median figures. 3 Long-term care costs can easily sabotage your retirement objectives, as well as your legacy, so it is critical to have a plan in place.